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Study: Many Net Users Research Now, Buy Later

While industry experts continue to focus on sales as the key indicator of e-commerce, they are overlooking the Web's power to drive consumer purchases in other distribution channels, according to a new Ernst & Young study.

"Internet Shopping," a special report produced by Ernst & Young and the National Retail Federation, reveals that nearly one-third of consumers (32%) with online access have purchased products or services on the Internet. Yet, only 4% make more than 10 purchases a year.

Sixty-four percent of those with Internet access research products online and later buy them through traditional channels--double the percentage of consumers who research and buy the same products online. Overall, 90% of consumer respondents said their online research is valuable in making purchase decisions.

"The Internet is much more than a passive advertising vehicle," said Brian R. Ford, area industry leader of the Retail and Consumer Products Group of Ernst & Young's Philadelphia Practice. "Our research shows that the Internet appears to be accelerating purchase decisions. Retailers and manufacturers must understand this to unlock the incredible value of the Internet."

Findings suggest that Internet shopping satisfaction continues to grow among a majority of Web purchasers. Fifty-six percent said they like the Internet's ability to offer comparison shopping, 52% are happy with online merchandising, and 50% said they enjoy the ease of navigation and the overall speed of process on the Web.

Clearly, the main reason consumers shop on the Internet is convenience (53%). At the same time, a large percentage of Web purchasers said that variety (46%) and cost savings (45%) were key factors in buying on the Internet. Internet security remains the biggest hurdle to prospective Web purchasers, with almost 70% reporting that they are uncomfortable sending their credit card number through cyberspace.

The typical cybershopper is neither a teenager nor a computer "nerd." Instead, findings indicate that Web buyers are well educated, well paid, and in their prime earning years. Sixty-four percent of online shoppers are between 40 and 64 years of age; 68% of online shoppers are male.

Retailers are extremely optimistic on the profitability of their Web sites, with more than two-thirds (67%) predicting profitability in the first year of operation. Eighty-one percent of retailers project profitable Web sites within two years.

The study consisted of comprehensive interviews with 850 consumers, 150 retailers, and 150 consumer products manufacturers about their current and future Internet buying and selling activities.